Alex is very right about the muffler thing. By changing to a righ type of muffler you can actually reduce the noise level significantly.

But to be honest this noise damping material works too. It will not have much affect on reducing the exhaust sound, but it sure will dampen down the noise of the mechanics like main gear noise etc. I have done testing with this type of stuff as I'm a F3C pilot and we also do have the noise limit in this contest class. By adding some sound damping material inside the canopy I was able to get the noise level down with few decibels. By changing from the Mille II/Dyna-X ver2. canopy to a Dyna-X ver1. canopy I was able to bring the noise level even more down.

I've seen (in my LHS) some rubber sleaves that are designed to fit around your muffler . I believe that they are made by K&S , and are claimed to reduce noise , but I've never known anyone to use them .

every think which is connected to the muffler and reducing noise, doing it by using power resources, e.g reducing power of the engine.
No magic over there, it is related

Alex (Formerly Known as RCMarket )

No , the sleaves fit over the main section of the muffler , they don't interfere with any gas flow , so I can't see how they could reduce power , although they may stop the muffler form disipating some heat .

Get an Electric Helicopter.
JOker
Ion
TRex 600
Raptor 620E
To name a few.

Ae

I have invested in some PC case sound-proofing packs after I found out that the material appears to be fuel-tollerant - I put a sample in a jar of 30% cool power for a week, and it doesn't appear worse for wear. It's 8mm thick and quite light.

No idea how it will help noise-wise in a fuselage yet - but I'll post the results.

I've also invested in a FunTech exhaust - it seemed the quietest in the hover out in Spain at the Worlds 05, and from my limmited attendance at the Euro 06 in the UK. Again no data yet, but I'll pose results.